Squeezing shorts via lending rates at Bitfinex?

deisik

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Quote from: upsidedown75 on February 04, 2019, 07:58:09 AM

I honestly wouldn't come up with this explanation if I thought about it for 100 years. It is the best case scenario and could actually be because of that, margin does result with a lot of cashing out and leaving the shorters with nothing at all which would mean a lot of money for bitfinex in the end

When you are day trading a few currency pairs, you will start to notice even the slightest discrepancies in their behavior. Actually, this is not the first time I see this happening and not the first time with Litecoin specifically. Such events happen regularly and you can use them as an indicator (with a good deal of caution, of course). And as I predicted yesterday, things are now back to normal, with Litecoin lending rates returning to their normal range

And Litecoin's price retracing to where it seems to belong

Quote from: ophyrim on February 04, 2019, 08:40:09 AM

According to https://vcdepth.io/coins/litecoin-ltc Market dept ratio (MDR) (24 hr MDR change) is +5.84% which means buyer/seller ratio is increased 5.84% in favor of buyer at the last 24 hr. This global combined books not just one exchange by the way

Bitfinex is still the primary price driver for many cryptocurrencies

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Quote from: deisik on February 02, 2019, 02:16:44 PM

Below is the lending book for Litecoin at Bitfinex (as of writing this post):

Typically, the Litecoin lending rates are in the range of 0.01-0.02% daily, so these rates are extremely high. But there is no important price action these days with Litecoin. My best guess is that someone (likely the exchange itself) has borrowed up all cheap lites to trigger an imminent short squeeze in Litecoin as such interest rates will soon become too high for the majority of borrowers forcing them to close their short positions in a day or two. That will drive the Litecoin price up (we will likely see that tomorrow), probably causing an avalanche of liquidations

So does anyone have an alternative (better) explanation in respect to these rates?

According to https://vcdepth.io/coins/litecoin-ltc Market dept ratio (MDR) (24 hr MDR change) is +5.84% which means buyer/seller ratio is increased 5.84% in favor of buyer at the last 24 hr. This global combined books not just one exchange by the way.

upsidedown75

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I honestly wouldn't come up with this explanation if I thought about it for 100 years. It is the best case scenario and could actually be because of that, margin does result with a lot of cashing out and leaving the shorters with nothing at all which would mean a lot of money for bitfinex in the end.

I mean it is little risk for lot of reward and even tough an exchange should not be favoring one side or the other and should be as distant to trading themselves as possible and let users do whatever they want against each other but with this method they would make money like whales and I do not see a reason why they would not at least test something like this if they have the power to do so. If I owned bitfinex I would totally give the order for something like this.

deisik

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Quote from: buwaytress on February 03, 2019, 11:01:38 AM

Too short a time frame to call anything. I saw a lot of unusually high lending order walls at Poloniex for Bitcoin circa early to mid-2017. This was more or less evident in the other currencies offered too. Nothing happened much in terms of price in that range, ups and downs, especially with alts, all losing gains quickly. It was actually after loans started drying up in June and July that the bulls really set in. So this was a time frame of months, not days

It doesn't feel like that

Though I understand why it may look like a minor aberration to you but not to me. The thing is I actively trade Litecoin, so I keep a very close eye on such things. Yesterday the lending rates went parabolic and today Litecoin surged, while everything else remained essentially the same. Not much but enough to make a difference for me. This is definitely not a coincidence, though it may look this way to an outside observer who is not involved it trading lites

Quote from: buwaytress on February 03, 2019, 11:01:38 AM

What's the lending book for BTC at Finex? It's practically been a drought for over a year at Polo

I think it is not much different at Bitfinex

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Too short a time frame to call anything. I saw a lot of unusually high lending order walls at Poloniex for Bitcoin circa early to mid-2017. This was more or less evident in the other currencies offered too. Nothing happened much in terms of price in that range, ups and downs, especially with alts, all losing gains quickly. It was actually after loans started drying up in June and July that the bulls really set in. So this was a time frame of months, not days.

What's the lending book for BTC at Finex? It's practically been a drought for over a year at Polo.

deisik

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Quote from: davis196 on February 03, 2019, 07:39:53 AM

Do you really think that one cryptocurrency exchange(even if it's the biggest one) can control/manipulate the price of litecoin?Is this legall?If binance gets all litecoins and starts selling,the LTC price will crash very soon and they won't get any profit.What's the point?

I'm curious if you really don't see how contradictory your statement is

At first you question whether an exchange (the biggest one at that) can manipulate the price and then you proceed to assert essentially the same in respect to another exchange ("If binance gets all litecoins and starts selling, the LTC price will crash very soon"). It kinda looks you should first make your own point more consistent and coherent before coming up with objections and disbeliefs. But you are always welcome once you are ready

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Do you really think that one cryptocurrency exchange(even if it's the biggest one) can control/manipulate the price of litecoin?Is this legall?If binance gets all litecoins and starts selling,the LTC price will crash very soon and they won't get any profit.What's the point?

deisik

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As I said yesterday, we would see today

And it turned out that Litecoin really surged this night while all other coins have been stagnating as before. So my assumption seems to have been proved correct after all. The short sellers were forced to close their positions which led to a price surge. This initial price rise likely triggered liquidation of other short positions which then also contributed to a higher price. Things should return to normal in a day or two, with Litecoin price returning to where it had been before this surge began

Quote from: Tytanowy Janusz on February 03, 2019, 04:20:14 AM

Borrowing coins is not a good strategy if you are predicting price grow. Just think what can you do with borrowed altcoins?

You first empty the lending book making shorting prohibitively expensive for some time. When the price rises due to shorts being closed, you dump these coins causing the price to crash. If you are an exchange and a top one at that, it will be easy money for you

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Quote from: Tytanowy Janusz on February 03, 2019, 04:20:14 AM

In my opinion its rather someone is collecting big amount of litecoins to perform stoploss attack

I also think that this would be the more likely cause. I've seen something similar with Monero once in the past at Poloniex.

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Quote from: deisik on February 02, 2019, 02:16:44 PM

My best guess is that someone (likely the exchange itself) has borrowed up all cheap lites to trigger an imminent short squeeze in Litecoin as such interest rates will soon become too high for the majority of borrowers forcing them to close their short positions in a day or two. That will drive the Litecoin price up (we will likely see that tomorrow), probably causing an avalanche of liquidations

So does anyone have an alternative (better) explanation in respect to these rates?

"borrowed up all cheap lites to trigger an imminent short squeeze".

Buying coins on exchange push price up what makes shorters to close their short what push price even higher. Thats short sqqueez. Borrowing coins is not pushing price up. Borrowing coins is not a good strategy if you are predicting price grow. Just think what can you do with borrowed altcoins? You can sell them now (if price will go up you will have to rebuy them with lost) or w8 for price pump and then sell them. But isnt it better to buy coins instead of borrowing? That way you will earn on pump and then on dump.

In my opinion its rather someone is collecting big amount of litecoins to perform stoploss attack or its just regular thing as adaseb said.

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The lending rates are high for LTC because it has been rising the past couple of days and people are shorting it because they think it will go down.

You can get more info and charts on Bitfinex lending rates here:
https://bfxrates.com/

I don't think the high lending rates makes people close their trades but it might be a good indicator when the market becomes overly bullish/bearish.

deisik

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Below is the lending book for Litecoin at Bitfinex (as of writing this post):

Typically, the Litecoin lending rates are in the range of 0.01-0.02% daily, so these rates are extremely high. But there is no important price action these days with Litecoin. My best guess is that someone (likely the exchange itself) has borrowed up all cheap lites to trigger an imminent short squeeze in Litecoin as such interest rates will soon become too high for the majority of borrowers forcing them to close their short positions in a day or two. That will drive the Litecoin price up (we will likely see that tomorrow), probably causing an avalanche of liquidations

So does anyone have an alternative (better) explanation in respect to these rates?

Topic: Squeezing shorts via lending rates at Bitfinex? (Read 186 times)